1absolute poverty
when a person has insufficient resources to meet human needs
2relative poverty
when a person is living below a certain income threshold in a particular country
3global poverty line
$2.15
43 problems with the concept of relative poverty
highly subjective, changes over time, cannot easily be used to make international comparisons
52 other measures of poverty
UN human poverty index, ratio method
6UN human poverty index
combines components such as life expectancy, literacy rates, long-term unemployment and relative income
7ratio method
calculates the proportion of income spent on basic necessities such as food or energy
86 causes of changes in absolute and relative poverty
level of indebtedness, level of unemployment, health or education, access to public services, state of the economy and real incomes, distribution of income
9income
the money earned by a person over a period of time
10income inequality
the unequal distribtuion of earning between individuals
11wealth
the stock of assets a person owns
12wealth inequality
the difference in the value of stocks of assets owned by individuals
132 ways to measure income inequality
Lorenz curve, Gini coefficient
14Lorenz curve plots the
cumulative percentage of income against the cumulative percentage of population
15the 45 degree line on a Lorenz curve represents
perfect equality
16the curved line on a Lorenz curve represents
the income distribution for a partical country
17gini coefficient of 0 represents
absolute equality
18gini coefficient of 1 represents
absolute inequality
197 causes of income and wealth inequality within countries
globalisation, difference in education, training and skills, differences in wage rates in different occupations, strength of trade unions, employment protection, level of welfare benefits, progressiveness of the tax system
208 causes of income and wealth inequality between countries
natural resources, history, political stability, macroeconomic policies, amount of foreign direct investment (FDI), trade liberalisation, technological change
21impact of economic change and development on inequality
in a primarily agricultural economy at an early stage of development, incomes are relatively evenly distributed, indistralisation increases inequality but at some point it starts to decrease
22Kuznets curve
inquality against income per capita
23capitalist economic system
free markey economy in which resources are owned by the private sector and prices are determined by supply and demamd